Gen Z’s “Little Treat Economy”

Despite rising debt and price pressures, younger U.S. consumers continue to spend on small indulgences—a pattern economists label the “little treat economy.” The term echoes the historic “lipstick effect,” where shoppers cut back on large purchases but still buy modest luxuries for emotional lift.

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• A Bank of America Institute study released in early August found Gen Z leading restaurant-spending growth “by a wide margin.”

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• Payments data show discretionary spending rising for coffee, pastries, beauty products, jewelry, and travel.

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• A Datassential survey of 1,000 respondents reported 77 % of Gen Z treat themselves at least weekly to coffee or similar items.

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• The same survey found 34 % use such purchases to “cope with stress” and 40 % cite an inability to afford larger treats.

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• Circana’s 2025 study indicated 73 % of U.S. consumers consider “small indulgences” important to quality of life.

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Bank of America Institute economist Taylor Bowley emphasized that many younger consumers still seek financial stability while refusing to pause life for perfect conditions. Yoon added that economic anxiety contributes to the trend but does not fully explain its specific form among Gen Z, suggesting that on-demand entertainment and shopping shape the preference for frequent, low-cost rewards.

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• “Many younger consumers still want financial stability, but they’re also unwilling to put life completely on hold while waiting for perfect conditions,” — Taylor Bowley, Bank of America Institute economist.

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• “I think economic anxiety is certainly part of the reason, but it does not fully explain why the ‘little treat’ trend has taken this particular form among Gen Z,” — Sunyee Yoon, associate professor of marketing.

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